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Michael Ashbaugh

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Dec. 8, 2020, 12:29 p.m. EST

Charting a slow-motion breakout: S&P 500 challenges 3,700 mark

Focus: Retail sector extends break to record highs, Apple sustains trendline breakout, XRT, AAPL, FFIV, SAIL, EMR, PDCO

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By Michael Ashbaugh, MarketWatch

Editor’s Note: This is a free edition of The Technical Indicator, a daily MarketWatch subscriber newsletter. To get this column each market day, click here.

Technically speaking, the U.S. benchmarks continue to trend higher, rising amid rotational price action, and persistent late-year strength.

Against this backdrop, the S&P 500 has rallied to press its latest round-number milestone — the 3,700 mark — while the Nasdaq Composite vies to extend a more aggressive break to all-time highs.

Before detailing the U.S. markets’ wider view, the S&P 500’s /zigman2/quotes/210599714/realtime SPX -0.84%  hourly chart highlights the past two weeks.

As illustrated, the S&P has sustained its latest modest break to record territory.

Tactically, the December peak (3,699.20) has thus far registered less than one point under the 3,700 mark.

Conversely, the former range top (3,682) is followed by firmer support matching the November peak (3,646).

Meanwhile, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.17%  has pulled in modestly from its latest record high.

Still, the index has maintained its former breakout point (29,964) an area also detailed on the daily chart.

Tuesday’s early session low (29,972) has registered slightly above support.

Separately, Monday’s close punctuated the Dow’s first consecutive closes atop the 30,000 mark. (Monday also marked just the third-ever close atop the 30,000 mark.)

Against this backdrop, the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -1.92% continues to tag all-time highs.

The prevailing upturn punctuates last week’s successful test of support matching the November peak (12,244).

Also recall that the Nasdaq has trended atop its 20- hour moving average, the hallmark of a strong near-term uptrend.

Widening the view to six months adds perspective.

On this wider view, the Nasdaq has extended a decisive 3.8% technical breakout. Consider that six of the prior eight closes have marked all-time closing highs.

Though near-term extended — and due a cooling-off period — the aggressive breakout confirms the primary uptrend.

Tactically, the November peak (12,244) is followed by the firmer breakout point (12,074).

Looking elsewhere, the Dow Jones Industrial Average broken less decisively to record highs.

The prevailing upturn punctuates a jagged test of the November range top. A near-term target continues to project to the 30,700 mark, about 2.1% above current levels.

Conversely, a near-term floor matches the former breakout point (29,964), an area also detailed on the hourly chart. Tuesday’s early session low (29,972) has registered slightly above support.

Meanwhile, the S&P 500 has sustained a respectable breakout.

To reiterate, the December peak (3,699.20) has thus far registered less than one point from the 3,700 mark.

Conversely, gap support almost precisely matches the breakout point (3,646), detailed previously.

The bigger picture

As detailed above, the major U.S. benchmarks are acting well technically.

On a headline basis, the S&P 500 and Nasdaq Composite have extended their initial Dec. 1 breaks to record territory (last Tuesday), rising amid still muted selling pressure.

Meanwhile, the Dow Jones Industrial Average has broken out less aggressively, rising atop the 30,000 mark amid recent catch-up price action.

Moving to the small-caps, the iShares Russell 2000 ETF has extended its late-year rally to record territory.

The bull-flag breakout punctuates a tight seven-session range.

Similarly, the SPDR S&P MidCap 400 ETF has extended its uptrend.

Here again, the breakout punctuates a seven-session flag pattern hinged to the steep November rally.

/zigman2/quotes/210599714/realtime
US : S&P US
4,538.43
-38.67 -0.84%
Volume: 2.71B
Dec. 3, 2021 5:35p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
34,580.08
-59.71 -0.17%
Volume: 444.85M
Dec. 3, 2021 5:35p
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/zigman2/quotes/210598365/realtime
US : Nasdaq
15,085.47
-295.85 -1.92%
Volume: 4.96M
Dec. 3, 2021 5:16p
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